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Edited version of your private ruling
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Ruling
Subject: Residency for tax purposes
Question 1:
Are you a resident of Australia for tax purposes?
Answer:
No.
Question 2:
Are you required to lodge a tax return in Australia for the 2011-12 year?
Answer:
No.
This ruling applies for the following periods:
Year ended 30 June 2012
The scheme commenced on:
1 July 2011
Relevant facts and circumstances
You are a citizen of both Australia and Country X.
In the 2010-11 year, you moved back to Country X with your children to live with your family.
You are seeking work in Country X.
Your children attend school in Country X.
You do not know if or when you will be returning to Australia.
Your former spouse has remained in Australia.
Your only Australian assets are two savings bank accounts.
You have never been a Commonwealth government of Australia employee.
Your only Australian income is dividend income.
When you departed Australia you informed the company paying the dividends you were moving overseas indefinitely.
Relevant legislative provisions:
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1936 Subsection 6(1)
Reasons for decision
Residency for tax purposes
Generally where you are a resident of Australia for taxation purposes, your assessable income includes income gained from all sources, whether in or out of Australia. However, where you are a foreign resident, your assessable income includes only income derived from an Australian source.
The terms 'resident' and 'resident of Australia', in regard to an individual, are defined within the tax provisions and provides four tests to ascertain the residency status.
Relevant to your situation are the first two tests which are examined in Taxation Ruling IT 2650 Income Tax: Residency - permanent place of abode outside Australia, a copy of which is available from www.ato.gov.au.
Given regard to your circumstances as a whole and a consideration of the relevant residency tests, it is accepted that you are not a resident of Australia for tax purposes.
Lodging an income tax return in Australia
As a non-resident, you are only required to lodge an Australian income tax return if you have Australian income that is not subject to non-resident withholding.
Non-resident withholding is where payers are required to withhold an amount from interest, unfranked dividend and royalty payments to non-residents.
Withholding rates are:
· generally 10% for interest
· generally 30% for dividends, unless an international agreement applies - however, the tax treatment of a dividend will depend on a number of circumstances and whether it has been franked.
In your case, you informed your financial institution that you were no longer living in Australia and had moved overseas indefinitely.
Therefore, any income you received from your financial institution should have had an amount withheld as 'non-resident withholding'.
Where a non-resident's only Australian income is subject to non-resident withholding, they are not required to lodge an income tax return.
In your case, your only Australian income is subject to non-resident withholding, therefore, you are not required to lodge an Australian income tax return.
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